Schroders secures first private debt mandate


MEDIA RELEASE: Schroders Capital – the private markets investment division of Schroders – has been awarded its first Australian private debt mandate from a large industry superannuation fund. The $250 million mandate will cover corporate, real estate and infrastructure debt, and is targeting a return of 4.5 per cent return over its benchmark, the Bloomberg AUSBOND Bank Bill index.

Schroders Capital has $103 billion of assets under management in private assets including $7.7 billion in infrastructure, $38.4 billion in real estate, and $25.4 billion in private debt and securitised credit (as at 31 December 2021).

Nicole Kidd, head of private debt, Australia, said the Australian private debt market although still nascent, is emerging as a strong and attractive region for private debt investors, in a global asset class that is forecast to grow to over $1.4 trillion by 2025. Schroders – with its long track record of growth and innovation – is well placed to capitalise on this growth for the benefit of its clients.

“We are seeing a great opportunity emerge in Australia in bringing together investors looking for attractive returns with borrowers looking for flexible capital.

“We also have access to Schroders’ global investment capability, bolstering our knowledge of local private markets and providing valuable additional information when making investment decisions.

“Our investment team covers the full spectrum of private debt across corporate, real estate, infrastructure; spanning senior, subordinated and unitranche. By leveraging this access to information, and our worldwide network, we can offer customised entry points into the asset class for clients.

“We create bespoke solutions for our clients by implementing our robust investment process including screening, analysis, due diligence, and execution for all of our investments, all while assessing and monitoring our ESG criteria throughout,” Ms Kidd said.

Chief executive officer of Schroders Australia, Sam Hallinan, said that institutional investors are increasingly looking to private debt to access diversified returns, and the team has experienced strong interest in this strategy.

“This is not surprising as there are some key advantages of investing in private debt for superannuation funds,” he said.

“Superannuation funds are becoming increasingly complex, dealing with more challenging paradigms, such as Your Future, Your Super, and the ability to leverage relationships with key managers is becoming ever more important to them.

“We see this partnership approach with our institutional clients as paramount, particularly in private assets where investment skill, experience and the ability to move quickly is critical.

“Private debt is becoming a sought after asset class for institutional portfolios. Investors are wanting to invest in assets that are non-correlated to equities, for instance, and that offer good diversification. Private debt portfolios for institutions can also be customised to ensure best fit with overall asset allocation strategy.

“This is an important milestone in the build out of our private assets business in this region,” Mr Hallinan concluded.

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